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F&O Strategy: Bull Spread on Nifty for November expiry

Nandish Shah of HDFC Securities recommends to Buy Nifty 19900 CALL and simultaneously sell 20000 CALL of the November series.

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Nandish Shah Mumbai
2 min read Last Updated : Nov 24 2023 | 6:33 AM IST
Derivative Strategy

BULL SPREAD Strategy on NIFTY

Buy NIFTY (30-November Expiry) 19900 CALL at Rs 79 & simultaneously sell 20000 CALL at Rs 39

Lot Size 50

Cost of the strategy Rs 40 (Rs 2,000 per strategy)

Maximum profit Rs 3,000; If NIFTY closes at or above 20000 on 30 Nov expiry.

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Breakeven Point Rs 19,940

Risk Reward Ratio 1:1.50

Approx margin required Rs 20,000

Rationale:
  • Long build up is seen in the NIFTY Futures during the November series till now, where Open Interest rose by 10 per cent with Nifty rising by 5 per cent.
     
  • NIFTY has broken out from the downward sloping trendline, adjoining the highs of 15-September and 17-October 2023 
     
  • Short term trend of the NIFTY is strong as it has placed above its 11- and 20-day EMA.
     
  • Amongst the NIFTY options, aggressive Put writing is seen at 19700 - 19800 levels.
     
  • FIIs long to short ratio in the Index futures segment stands at an oversold level of 0.29 levels which in-turn suggest higher possibility of a short covering by them from heron.
Note: It is advisable to book profit in the strategy when ROI exceeds 20%.

Disclaimer: Nandish Shah is Sr. Derivatives & Technical Research Analyst at HDFC Securities. He doesn't hold any position in the stock. Views are personal.

 

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Topics :Market technicalsTrading strategiesNifty OutlookF&O Strategiestechnical analysis

First Published: Nov 24 2023 | 6:33 AM IST

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